Compounding is a technique that allows pharmacists and other medical practitioners to meet the unique needs of certain patients by creating tailor-made drugs. Although the practice has many practical benefits, it has also come under increased scrutiny as a means of committing fraud. If you know of a pharmacy or business engaged in compounding pharmacy fraud, you can potentially receive a substantial reward for filing a whistleblower action under the False Claims Act. Jeff Newman Law works with whistleblowers to expose wrongdoing and help them claim compensation for doing so.

What Is Compounding?

The U.S. Food and Drug Administration explains that compounding is the act of combining, mixing, or altering drugs or drug ingredients to create a medication that is personalized to the individual needs of a patient. Although the individual drugs may be FDA-approved, the compounded drug is not.

Mass-produced pharmaceutical drugs do not work for some patients. For instance, a patient may not be able to tolerate certain ingredients, such as dyes, that are normally used to create a drug. This is especially true for patients with allergies. In some cases, including for children, the dosage of a commercial drug is too high and needs to be reduced. Not everyone can take medicine in a tablet or capsule form, as they may have trouble swallowing it. For these and other reasons, compounding allows the practitioner to create an alternate way of taking the drug.

How Does Compounding Help Patients?

All pharmacists learn to perform basic compounding during their training and education. Compounding pharmacies often have special equipment that allows them to safely and effectively compound drugs. By doing so, the pharmacist can:

  • Alter the strength or dosage of a medicine
  • Remove an unwanted and non-essential ingredient which may cause an allergic reaction
  • Put drugs into topical creams, liquids, gels, suppositories, and other forms that are suitable for a particular patient
  • Flavor a medication to make it more tolerable to a child

Compounding serves a critical role for many patients who might otherwise have to go without a vital medicine. However, compounding has not been without controversy, and not just with respect to the FDA. Federal investigators have learned that compounding is sometimes used to commit fraud on the government.

What Is Compounding Pharmacy Fraud?

The healthcare industry is unfortunately a major source of fraud on both private and public health insurance programs. In particular, compounding may be used to defraud Medicare, Medicaid, and other federally funded government services.

In 2018, for example, a New York man admitted to operating a large-scale conspiracy to submit fraudulent claims for medically unnecessary compounded medications. The scheme reportedly defrauded private and federally funded insurance programs to the tune of $45 million.

Steven M. Butcher, owner and operator of MedMax LLC, submitted false claims for a variety of unnecessary prescription compounded medications. Among them were scar creams, pain creams, and metabolic supplements. Butcher and others targeted individuals who were covered by insurance plans that paid for compounded medications. In addition, he received substantial kickbacks for referring prescriptions to a particular compounding pharmacy.

The Butcher/MedMax case is illustrative of the different forms that compounding pharmacy fraud can take. More particularly, such fraud may involve:

  • Unnecessary products. The fraud can include adding ingredients to a compound that are medically unnecessary but increase the cost of the drug. These don’t benefit patients but do churn out profits in the form of fraudulent claims.
  • Billing for separate ingredients. A related practice is charging for separate ingredients in a compound. Rather than charge a single price for the drug, which would be cheaper, an unscrupulous individual or company may charge for the individual parts of the medicine.
  • Falsifying patient records. A pharmacist or other party may alter patient records to indicate they need a compounded medication when they don’t. This could include, for instance, falsely stating a patient has an allergy.
  • Kickbacks. This refers to the practice of referring compound prescriptions to a specific pharmacy and receiving a percentage of profits back. Actions like these violate federal anti-kickback laws but may be disguised as investments or otherwise to hide the wrongdoing.
  • Billing for medicines never provided. In particularly egregious cases, the medication is not even provided to the patient but the government is billed. This is sometimes called phantom billing.

Actions like these not only jeopardize patient health and erode their trust in doctors and pharmacists. They also cheat taxpayers when fraudulent claims are submitted to Medicare, Medicaid, TRICARE, and other government programs for reimbursement.

Individuals Who May Be Engaged In Compounding Pharmacy Fraud

The government cannot prosecute all incidents of compounding pharmacy fraud, and relies on whistleblowers to help alert them. Cases like these often implicate the following types of persons:

  • Pharmacists
  • Pharmaceutical sales representatives
  • Physicians and physician practice owners
  • Other business owners
  • Executive officers (CEO, COO, etc.)
  • Marketers

If you have knowledge that these or other individuals are submitting false claims to the government involving drug compounds, you can take action and potentially receive a reward for doing so.

Let Jeff Newman Law Help

Our firm is committed to working with whistleblowers to expose fraud on the government. Whistleblower claims are complex and are not like ordinary lawsuits. They require the legal experience and knowledge of a law firm that has dedicated its practice to this unique area of law. Jeff Newman Law is that firm, and we’re ready to help you. Whistleblowers can receive a portion of the funds recovered by the government, which in some cases is in the millions of dollars.

Contact Our Compounding Pharmacy Fraud Whistleblower Attorney

It’s important to act quickly if you have evidence of compounding pharmacy fraud since the law rewards first in time claimants. Call us today to set up your confidential consultation.